The State of Trade: Commissioner's First Year and Look Ahead

Remarks by R. Gil Kerlikowske at U.S. Chamber of Commerce on Tuesday, March 24, 2015, 9:30 a.m. to 10:30 a.m.

Introduction

Thank you, Ann, for that kind introduction. Good morning, Chamber members and guests. It is a pleasure to be here and I appreciate the opportunity to speak with you today.

I would also like to thank everyone who is attending “remotely” via webcast. I’m so grateful to be able to reach so many people and share what’s going on at CBP and why it is so important.

The Chamber is vital to our nation’s economic health. As champions of American business, you help U.S. industries compete and lead on the global playing field.

I believe that U.S. Customs and Border Protection plays a critical role in that effort, and the success of our mission – ensuring border security while facilitating lawful trade and travel – is integral to America’s global competitiveness.

On a typical day, CBP processes more than one million people; screens more than 70,000 truck, rail, and sea cargo containers at 328 ports of entry; and processes $4.4 billion in exports and $6.8 billion in imports.

My First Year as Commissioner

When I spoke with you last May, I had been CBP Commissioner for two months. Some of you were wondering then how a career law enforcement professional like me would navigate the complexities of trade.

After all, issues like supply chain security, cargo pre-inspection, and mutual recognition arrangements have their own special language, far different and – some might say – a bit more “opaque” than the law enforcement lingo of narcotics smuggling and passport fraud.

In my first year as Commissioner, I have seen first-hand how integral CBP is to our nation’s economic health and vitality, and the safety and security of the global supply chain.

In FY 2014, CBP cleared $2.5 trillion in imports, and $1.6 trillion in exports, and processed approximately 26 million cargo containers -- increases of about 4 percent over 2013.

Seeing firsthand this volume at our ports provided me a greater understanding of the complexities of the trade process, and how they can present some significant challenges for global businesses.

Nearly 50 U.S. federal agencies have equities in the trade process, with hundreds of paper forms required to import and export goods. The system is time-consuming and costly – not only for the government, but for all of you as well.

That is precisely why CBP has focused on streamlining and modernizing our processes. We are automating core capabilities to reduce redundancies and increase predictability, preparing CBP to meet the growth in international trade predicted for the next few years.

I want to share with you here today the progress we’ve made, as well as the course we’ve charted for the year ahead.

Year in Review: Transforming Trade

A. Filling Key Trade Positions

One of the concerns I heard even prior to confirmation was about consistency in CBP’s trade leadership. At the time, CBP had been operating without a Senate-confirmed Commissioner for over 5 years, and there were too many “Acting” titles in key leadership positions throughout the agency.

I understand the need for consistent, confirmed leadership in these positions critical to the functioning of the agency, and to our partners outside of CBP. That is why I was proud to appoint:

Brenda Smith, Assistant Commissioner for International Trade;

Sandra Bell as her Deputy;

Todd Owen, Assistant Commissioner for Field Operations;

John Wagner as his Deputy; and

Rich DiNucci, Executive Director, Cargo/Conveyance Security.

All of these individuals are experts and innovators in our trade mission, and are tremendous assets to the agency. They, along with Maria Luisa Boyce, our head of Trade Relations and our Trade Ombudsman, and additional staff in my direct office, work with me on a daily basis to ensure progress on our trade priorities continues.

I am also pleased to announce here today that we have selected Stephen Hilsen as the CBP Lead Executive for the Single Window Initiative. Steve will coordinate the activities of all offices within CBP that have a role in the development of the Single Window, and he is the primary point of contact for CBP participation in all U.S. government activities relating to Single Window. That includes the Border Interagency Executive Council, the board of the International Trade Data System, and all our trade community stakeholders and the more than 40 U.S. government agencies that regulate imports and exports.

B. ACE and the Single Window

Speaking of Single Window, as part of CBP’s Trade Transformation Strategy, we’ve accelerated the deployment of our import/export processing system – the Automated Commercial Environment, or “ACE.” Most of you recognize what a huge shift this is, moving from paper-based and legacy systems to faster, modernized, and more cost-effective electronic submissions.

As we close in on key milestones on May 1st and November 1st of this year, and October 2016, CBP continues to develop, test, and deploy new capabilities all designed to transform cargo processing in the U.S.

As most of you know, ACE is the core of the Executive Order signed by President Obama in 2014. This set a December 2016 deadline for completion of a government-wide, automated “Single Window,” which would streamline the entire U.S. government export/import process for American businesses.CBP and DHS are spearheading this effort, and ACE is the “Single Window” that will allow all relevant Federal agencies to simultaneously review and respond to cargo movement, reduce costs, and speed the cargo process – getting goods into the commerce stream faster.

We are working closely with our Federal partners, including the Environmental Protection Agency (EPA), the Food Safety and Inspection Service (FSIS), and many others to ensure ACE is equipped to meet their requirements, and that the Single Window is completed to serve your needs and simplify international business.

C. E-Bond

On January 3, CBP successfully deployed “eBond” processing in ACE. As one of the most important modernization efforts in ACE, eBond is a tremendous benefit to both CBP and to filers – both customs brokers and self-filing importers.

Now, when filers electronically transmit a bond to CBP, they get a positive response from ACE within 10 or 15 seconds. Compare that to the world before eBond, when some of them might have to wait as many as 4 or 5 business days, and you can truly understand the magnitude of this change and its effect on the supply chain.

Industry has recognized this benefit. In the first month of eBond, more than 11,000 bonds were created in ACE. Today, more than 90 percent of the CBP bond market is submitting electronically.

D. Centers for Excellence and Expertise

Another key development is the growth of CBP’s Centers of Excellence and Expertise. The Centers are transforming the way we operate by consolidating an entire industry’s processing under the authority of one Center, instead of scattering it throughout hundreds of ports of entry.

On January 28, three of CBP’s 10 Centers expanded to start managing all post-release activities within their specific industry sectors:

Electronics (managed from Los Angeles);

Pharmaceuticals, health care and chemicals (New York); and

Petroleum, natural gas, and minerals (Houston).

We look forward to getting the other 7 Centers to full functionality as soon as possible.

E. Trusted Trader

As you know, our Trusted Trader Program has been a key focus area for quite some time. We are unifying the current Customs-Trade Partnership Against Terrorism (C-TPAT) and Importer Self-Assessment (ISA) processes to integrate supply chain security and trade compliance.

The Trusted Trader program will align with Authorized Economic Operator (AEO) programs implemented by other countries around the world to enhance security and facilitate global trade.

In designing the program, we are coordinating with the trade community and other government agencies to build a program the meets the government’s security and compliance requirements, while ensuring that participation is a “value-add” for industry.

F. Cargo Security

Finally, our Air Cargo Advance Screening – or “ACAS” – program shows how collaboration with private sector and other law enforcement agencies enhances our enforcement and targeting capabilities.

ACAS was launched in the wake of a real terror threat – the explosives hidden in printer toner cartridges intercepted in express mail shipments from Yemen, destined to the U.S, in 2010.

At the National Targeting Center, CBP and the Transportation Security Administration jointly target and mitigate any air cargo identified as “high risk” before it is loaded aboard U.S.-bound aircraft.

Industry has recognized the value of this program, improving national security and integrity of the supply chain, and preventing major business disruption. In the year since I took office, industry participation in ACAS grew by 15 percent, and we now have 51 participants.

Collaboration and Partnerships

The major initiatives I’ve described here – Single Window, the Centers, Trusted Trader, and ACAS – underscore CBP’s commitment to working with our stakeholders to modernize how we do business.

A. COAC

A key platform for collaboration with industry is the Commercial Operations Advisory Committee, or “COAC.” COAC comprises a broad array of private sector representatives, each bringing an incredible depth of experience and expertise in customs processes, the global supply chain, and other key fields that can inform and effect how CBP operates.

The parameters for the Single Window, for example, have been subjected to careful review and validation both within CBP and with the broader trade community, and COAC is key to that progress.

COAC is an invaluable asset for CBP, and I am pleased to announce the selection of the new members for COAC’s 14th Term:

Cynthia Allen, DHL Global Forwarding

Brenda Barnes, Geo S. Bush & Co.

Heidi Bray, FCA US, (formerly Chrysler Group)

Celeste Catano, Kewill

Lenny Feldman, Sandler, Travis & Rosenberg

Lisa Gelsomino, Avalon Risk Management

Alexandra Latham, Costco Wholesale

Amy Magnus, A.N. Deringer

Adam Salerno, U.S. Chamber of Commerce

Madeleine Veigel, Expeditors International

Michael White, International Air Transport Association

Michael Young, Orient Overseas Container Line

They join 8 reappointed members:

David Berry, Swift Transportation

Scott Boyer, Kraft Foods Group

Brandon Fried, Airforwarders Association

Suzanne Hoeger, Abbott Laboratories

Vincent Iacopella, The Janel Group

Elizabeth Merritt, Airlines for America

Julie Ann Parks, Raytheon Company

Kevin Pinel, Microsoft

I look forward to strong partnerships with this group of experts and leaders during the forthcoming term.

B. Interagency Collaboration/BIEC

As most of you know, successful collaboration across the Federal government requires considerable effort and strong relationships. The Border Interagency Executive Council (BIEC), established under President Obama’s directive, brings together senior leaders to examine and improve the import/export process across the U.S. government.

CBP and DHS have key leadership roles in this group, as it examines how we make decisions about risk and how we use that information to move cargo, collect revenue, and enforce health and safety laws. All of these discussions are informed by advice from industry to improve supply chain processes and reduce barriers for trade.

This type of collaboration is critical for me, and a core priority for CBP. For example, during the five years that I served as President Obama’s drug policy advisor, I worked very closely with Peggy Hamburg, the FDA Commissioner.

Thanks to this long-standing relationship, we created a new CBP-FDA working group to improve the supply chain process of FDA-affected products and implement the Single Window. I want to thank Peggy for her partnership and for her strong leadership as she retires and we look forward to working with other FDA senior leadership to continue that relationship.

I am also working closely with Elliott Kaye, Chairman of the Consumer Products Safety Commission (CPSC), to deepen CBP’s partnership with CPSC and identify ways to improve the processing of consumer products at our ports.

These partnerships bring real results, allowing government to function better, and providing real value to American business.

C. International Engagement

I have met with many of you during my first year as Commissioner, and the Chamber’s members have made it abundantly clear that CBP must continue to be a leader when it comes to setting the example for global supply chain security standards and enforcement.

I recognized early that the world watches CBP closely and we are eager to share our experiences with our foreign counterparts so that we all can benefit from better aligned policies.

To that end, CBP is a key leader within the World Customs Organization(WCO). The other 178 member nations show considerable interest in CBP’s initiatives and policies, and I have sought out opportunities to engage with them.

And that is why I was proud to nominate Ana Hinojosa, our Deputy Assistant Commissioner for International Affairs, to be the U.S. delegate to the WCO’s Director of Compliance and Facilitation. Ana would bring considerable expertise and leadership to this international body, and her leadership can strengthen our work with key trade partners.

The security and integrity of the global supply chain depend upon these international partnerships. Mutual Recognition Arrangements are a critical tool in aligning standards within the international community. MRAs provide the platform to exchange trusted trader information and harmonize reciprocal supply chain security programs.

In my first year as Commissioner, I signed several bilateral accords, including MRAs with Mexico, Israel, and Singapore – bringing the total number to 10 since 2003.

D. Mexico and Canada

A key focus of mine has been strengthening our relationships with Canada and Mexico. I have made several trips to Mexico in support of our mutual interests along the nearly 2,000 miles of shared border and nearly 50 ports of entry. One of the key elements of my ongoing engagement, building upon the areas identified under the 21st Century Border initiative, is improving and expanding border infrastructure.

We are modernizing the San Ysidro and Nogales ports of entry, and we have developed a reimbursable agreement for a terminal facility at the Tijuana Airport.

And as I mentioned, our two countries signed a mutual recognition arrangement in October, allowing for reciprocity between our C-TPAT and NEEC {Neck} supply chain security programs. This signing represents one of the largest mutual recognition arrangements in the world between two border countries.

On our Northern Border, just 10 days ago, the U.S. and Canada signed a comprehensive new Preclearance agreement in accordance with the 2011 Beyond the Border Action Plan. This historic bilateral accord covers all modes of transportation between the U.S. and Canada – land, rail, marine, and air. The immigration, customs, and agriculture inspections required for entry into either country will be able to be handled on foreign soil, on the opposite side of the border.

This will reduce congestion and delays and increase efficiency and predictability in cross-border travel, tourism, and transportation.

The next step required to implement this groundbreaking new agreement is for the U.S. and Canada to enact legislation. Such legislation was introduced during the last Congress, and I am hopeful that you will support its passage in this Congress.

Preparing for the Future

What is clear to me is that efforts to modernize CBP need to reflect the realities of your business and the constant evolution of the global supply chain. I also recognize that while we have some major efforts already underway, there are some areas where we need additional focus.

A. Trade Enforcement

Even before my confirmation as Commissioner, I heard from trade and Congressional leaders about the importance of enforcing U.S. trade laws, and the critical role CBP plays in protecting American business and the U.S. market. We have made some incredible strides.

For example, CBP and Immigration and Customs Enforcement, Homeland Security Investigations (ICE/HSI) continue to enhance our training, processes and operations to attack the smuggling and explosive growth in shipments of counterfeit and goods, many of which pose serious threats to public health, safety and both national and economic security. In addition, trade penalty assessments have increased by 140 percent from $385.4 million in Fiscal Year 2011 to $925.9 million in Fiscal Year 2014.

But I know there are other aspects of our trade enforcement mission that could benefit from improved transparency and responsiveness to our private sector partners.

One area is enforcement and collection of Anti-dumping/Countervailing Duties. CBP leadership is currently working with industry and Congress to increase communication around our enforcement efforts, and to identify mechanisms that may improve outcomes and prevent evasion of these duties.

B. Reviewing CBP Regulations

CBP is also examining ways to review our existing regulations and regulatory process. I believe, as do many of my leadership team, that there might be ways to improve and streamline this process. This is a complex and time-consuming discussion, but an invaluable one. I also welcome your ideas, as these are the types of discussions that can make a real difference for years to come.

Conclusion

These are just a few of the efforts I look to pursue in the coming year, but everything I do as Commissioner recognizes the magnitude of CBP’s trade and security mission. CBP plays a crucial role in protecting America’s national security, safeguarding the supply chain from terrorism, transnational crime, and fraud.

We carry out that mission, while still facilitating the lawful flow of commodities and business across our borders. We must be an agile organization, able to modernize our policies and processes to meet that demand.

The World Economic Forum found that removing supply chain barriers could increase the global economy up to 6 times more than removing all tariffs. When I heard that, I understood the potential impact that CBP can have on international trade. I want you to know that I recognize that responsibility, and appreciate all the input and cooperation that you provide to make us better.

We rely on a robust dialogue with the Chamber and its members so we can continue to fulfill our commitment to operating as a premier law enforcement agency while helping America’s businesses remain competitive in the global marketplace.

Thank you.

U.S. Customs and Border Protection is the unified border agency within the Department of Homeland Security charged with the management, control and protection of our nation's borders at and between the official ports of entry. CBP is charged with keeping terrorists and terrorist weapons out of the country while enforcing hundreds of U.S. laws.